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Blame Iran And China For Rising Gas Prices

Iran’s Oil Ministry on Sunday announced the suspension of crude oil sales to companies from the U.K and France as the Islamic state responds to a European Union embargo set to take effect July 1. France’s Total and Britain’s BP had already ceased purchasing Iranian oil prior to the announcement, so the impact on supply and demand may be tiny.

Combined with a surprise decision on Saturday by the People’s Bank of China to reduce banks’ reserve requirements for the second time since November, however, Iran’s action helped to boost West Texas Intermediate crude oil above $105 per barrel in electronic trading Monday.

This is as high as crude has traded since last May when it peaked above $114 on fears that the wave of revolutions in Arab countries like Egypt and Libya would disrupt supplies.

Image by Getty Images via @daylife

Back then, the average price of a gallon of unleaded gasoline for U.S. drivers hit $3.96. Have you been paying attention to the numbers on the pump when you fuel up lately? They’re chugging higher again, up 5% in the past week alone to $3.565 on Monday, according to AAA’s Daily Fuel Gauge Report.

Average gas prices are up 12% from a year ago, What that translates to as far as wallet pain is forking over $71.20 instead of $66.36 for filling up your 20-gallon tank.

Don’t even tantalize yourself into thinking back to the end of 2008 when that same 20-gallon fill-up would have only cost $32.20, less than half as much, with $1.61 gas. Of course, that was back during the depths of the financial crisis, when we weren’t sure the ATMs–or the card readers on the gas pumps–would be working.

Gas has quadrupled in price since the really good old days 13 years ago. In the aftermath of the Asian financial crisis and Russian debt default, gas prices held below a buck-a-gallon for five months in late 1998 and early 1999.

To be sure, the industrial rise of China is helping to pump up the price of oil and gas, along with the improved outlook in the U.S., where several months of economic data show improvements in employment, industrial production and consumer spending.

In China, the central bank has spent the past year hiking interest rates to cool off inflation that’s running at 4.5% a year. The PBOC’s other monetary tool, what it requires banks to have on hand as deposits for a given level of lending, has recently been geared toward easing since last November. The most recent 0.50% cut brings the biggest banks’ required reserve ratio down to 20.5%, meaning that lending can total 4.88 times deposits.

Feeding an economy projected by the IMF to grow at 9% a year, Beijing doesn’t mind taking diplomatically unpopular stands to keep the crude coming. Earlier this month, China and Russia vetoed a U.N. resolution urging Tehran’s ally, Syrian President Bashar al-Assad, to step down from power.

China also has no plans to join the EU and U.S. embargo on Iranian oil exports. On Monday, Reuters reports that Iran has agreed to sell 240,000 barrels per day to China’s state oil trader Zhuhai Zhenrong in 2012. Just this past Thursday, Iran’s National Iranian Oil Co. agreed with its largest Chinese buyer, a division of state-controlled Sinopec, to supply 220,000 barrels per day to its Unipec subsidiary. Iran exported about 560,000 barrels a day to China last year, a big chunk of Iran’s daily oil production of 4 million barrels per day, and 20% of all Iranian oil exports.

Exploration and production companies on steroids have been a good way to ride crude’s rebound. This leveraged ETF that’s designed to move 200% in the opposite direction of an index of oil and gas exploration and production companies is up 68% since October 3. Refiners like Valero and Tesoro are up 47% and 53%, respectively, in the same period. Big integrated oil majors like Chevron and Exxon Mobil are up 21% and 22%.

The overall energy sector, via the Energy Select Sector SPDR (XLE) ETF, has tacked on 33% in the past six months, similar to the return of the Oil Services HOLDRs (OIH). When the energy bulls are running, the smaller and more speculative the better. In exploration, Carrizo Oil & Gas (CRZO) is up 55% since early October, while offshore platform outfit Gulf Island Fabrication (GIFI) is up 70%.

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The US is the one behind sanctions on Iran, and our industrialists and investor class have been the behind this decades long rush to move our industrial base to china and create a world power out of them.

There we go again, let’s blame China for everything syndrome, geez, you might as well Blame China for US obesity. This is why the world thinks of us as a bunch “I am perfect princess”, stop doing business with China if they are so horrible and arrest all the CEO’s for doing business. But guess, what, it ain’t happening!

American government/people always vilify and try to destroy those they disagree with and want their land and/or resources. America gives Israel billions (not counting the land they’re on), doesn’t try to take away Israel’s nuclear capability, which has no oversight and America buddies with Israel yet claims Iran is a threat to the world and that China is a villain on many levels. American media continues it’s pro-business interest/capitalistic agenda. Most of the 99 percenters will believe these kinds of articles and headlines without suspecting the tremendous bias and misrepresentation. America manipulates the price of oil and gas (so businesses take profits from our dependency), claiming a crisis when no crisis exists except a crisis of conscience/common sense and a crisis of connection to the God they continue to ask to bless America.

It’s not Iran’s fault, its President Obama’s fault, he signed sanctions on Iran to seize their central bank and operations there. China imports 80% of their oil from Iran, so they are not happy with Obama and the United States as well.

Don’t believe the lies in the media, get informed and research on the internet whats really going on.

Let me get this straight. US and EU sanction Iran’s oil and try to remove 4 million barrels a day off the world market, and when the price of gas goes up, Forbes headlines “Blame Iran And China For Rising Gas Prices”.

This headline should win the “We-think-our-readers-are-so-stupid-that-we-can-feed-them-any-cr*p” prize.

I do not think that about headlines, Samdix. There is less oil taken off the market if the U.S. and Europeans seek to shut down Tehran’s exports and leading revenue source as an alternative to more immediate military action by Israel against Iran. If conflict erupts in the Strait of Hormuz and tankers cannot pass, that keeps 15-17 million barrels per day from getting out of the Persian Gulf…far more than Iran’s 4 million bpd total production, not all of which goes to exports.